December 6, 2021
The abrupt arrival of the pandemic in Georgia required state and local governments to issue several orders to reduce the potential for virus exposure and transmission. These changes forced many businesses to consider alternate service models to operate within the new guidelines. Concurrently, stay-at-home orders resulted in a sharp decline in demand creating an additional problem for struggling businesses. Not only were business owners placed in a peculiar predicament, but so were government organizations. The lack of commerce meant that funds typically collected through sales, use, and other taxes did not materialize. In fact, Georgia reported a 16% tax revenue decline in 2020. To address the revenue gap, many states are increasing efforts to identify those with outstanding filings or unpaid taxes. The good news for Atlanta taxpayers is the Georgia Voluntary Disclosure Agreement program available to those with unfiled or unreported liabilities. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
The VDA program provides the opportunity for individual and business taxpayers with unfiled or underreported tax liabilities to come to a resolution with the Georgia Department of Revenue (GDOR). Unfortunately, those who have already been contacted by the GDOR are not eligible to participate. Eligible applications typically receive penalty waivers and a limited lookback period in which outstanding taxes must be reported and paid.
To qualify for the program a taxpayer must submit an application form, have not been previously contacted by the GDOR, and be compliant with all other state tax obligations. Only sales and use, withholding, corporate income, net worth, and individual income tax liabilities are covered by the VDA. It is important to note that when an applicant is non-compliant with more than one type of tax, it is necessary to apply for VDAs for the different tax types on one application.
The application requests significant and detailed information about a taxpayer’s activities. Specific information must be provided on:
For those electing to participate the primary benefits include a penalty waiver and a limited look-back period. In terms of penalties, generally, all penalties are waived for the periods included in the VDA agreement, but interest will still be charged.
The look-back period is typically a minimum of three years for all state tax types. In the case of sales and use taxes, there may be an extended period necessary to recapture the taxes collected but not remitted. Ultimately, the length of the look-back period will be based on many factors including the nature of the taxpayer’s activities and other details submitted on the VDA application.
The opportunity to take part in the Voluntary Disclosure Agreement program represents an opportunity for certain taxpayers to resolve open matters. However, it is imperative to speak with a qualified tax advisor to assess your situation BEFORE making any disclosures to the GDOR. This will ensure your interests are well-protected. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.